abidjan international airport

ABIDJAN INTERNATIONAL
AIRPORT
A viable concession despite the turmoil
In 1996, management of Abidjan international airport was taken over by a private operator. Although
the financial equilibrium of the concession was disrupted by a series of events – not least the 2010-11
Ivorian crisis – the situation has improved markedly since the 2010s. The Airport’s development is
closely bound up with that of the national economy and it is currently the focus of an ambitious
EUR 100 million investment programme.
F
Francis Brangier
CEO, Egis Airport
Operation
élix Houphouët-Boigny international airport in Abidjan was one
of the first African airports to be
taken over by a private operator, in this case a public-private
partnership. The Marseille-Provence Chamber
of Commerce and Industry (CCIMP), which
managed Marseille airport at the time, joined
forces with the Sofréavia airport engineering
consultancy (acquired by the Egis Group in
2006). Together they founded an Ivorian entity,
AÉRIA, to which the concession was awarded.
Fifteen years later, in 2010, the Ivory Coast
government reaffirmed its commitment to the
Egis Group and the CCIMP by renewing the
AÉRIA concession for a further twenty years.
As the leading economic power in French-speaking West Africa, the Ivory Coast has recorded
impressive GDP growth1 since 2011: according
to the country’s Economy Minister, GDP per
capita increased over 20% in three years, putting
the country back on a growth footing. Abidjan
Airport forms part of this regional development
infrastructure and since the start of the concession it has reflected general economic trends
and faced some serious crises which have been
overcome thanks to remarkable adaptability.
1996-2011: A PROMISING START FOLLOWED BY UNREST
I
n 1995, the poor state of airport installations and the need to modernise
them without the availability of public
funds led the Ivory Coast government
to seek out a private operator capable
of deploying a major investment programme.
The 43% surge in traffic between 1996 and
1999 required the new operator to adjust its
initial budget from CFA 16 billion to over CFA
25 billion2 in order to upgrade all of the installations (i.e., air terminal, aprons, runways
and car parks) to be able to accommodate an
estimated two million passengers by the end
of the 15-year concession.
1 10.7% in 2012, 9.2% in 2013, 8.5% in 2014, 8.4% in 2015 and 8.5% forecast for 2016.
2 From EUR 24 million to EUR 37 million.
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PRIVATE SECTOR & DEVELOPMENT
The chosen model was accepted by AÉRIA’s
international banking partners and backers. One
such grouping included the French Development
Agency (AFD), the European Investment Bank
(EIB) and the West African Development Bank
(WADB) which financed 50% of the project – the
other half was financed out of the company’s
own funds. Beginning in 1996, the work was
successfully completed in 2000, transforming
Abidjan Airport into one of the best-equipped
in West Africa. In 1999 international passenger
traffic reached nearly 1.3 million, an all-time
record for the airport (FIGURE ).
However, the Airport’s financial equilibrium
was disrupted by a series of major events, particularly the political crisis in the Ivory Coast
which began in 1999 and lasted for 12 years.
The terrorist attacks on 11 September 2001
and the resulting fallout among airline companies (i.e., the financial meltdown of Sabena
and Swissair, two key airlines in Abidjan) also
damaged the airport, as did the collapse in 2002
of Air Afrique which had accounted for 40%
of passenger activity. In 2003, passenger traffic stagnated at 700,000 and it was not until
2014 that numbers finally crept back above
1999’s record levels. Throughout this period
of uncertainty, it was essential that the managing authority “survived” and the quality of the
relationship with the licensing authority – the
Ivory Coast government – was critical to this
survival. The government increased the level
of passenger charges3 and this appreciation of
the financial pressures being faced by a private
operator greatly helped preserve the economic
and financial equilibrium of the concession as
it confronted the slump in traffic triggered by
these crises. The quality of the relationships
with the financial backers (e.g., the agreement
to renegotiate the debt in line with the resources
available to the operator) and the operator’s
careful management of its overheads also helped
the Airport to weather the storm.
FOCUS
EGIS AIRPORT
OPERATION
A subsidiary of the Egis Group,
Egis Airport Operation is entirely
focused on airport management.
It manages a network of 14 airports
spread across four continents,
handling more than 25 million
passengers and 320 tons of freight.
It holds a 35% shareholding in AÉRIA,
the private company that runs Abidjan
International Airport, alongside the
Ivory Coast government (10%) and
private shareholders (65%). The
international engineering group
Egis is 75% owned by Caisse des
Dépôts and provides structuring and
operational services in numerous
sectors. With 13,000 employees,
turnover was EUR 937 million in 2015.
2012-2016: IVORY COAST BACK ON A GROWTH FOOTING
T
he airport operator has clearly
demonstrated its ability to
weather difficult periods, having
met all of its obligations despite the successive crises. The
renewal of its concession in 2010 represented
due recognition of its effective management and
enabled the concession agreement itself to be
readapted in line with the realities of the sector.
New clauses provide for investment plans that
may be adapted according to changing conditions.4
These give AÉRIA flexibility in the event of a
drop in traffic or a need to react to developments
within the aviation sector (changes in the type
of aircraft, issues with airport security, etc.). The
adaptability of the public-private partnership
is a significant asset in the return to growth.
After ten years of political and economic crises,
the Ivory Coast is back on the path to growth
and expansion. As the country’s international
gateway, the airport must support and reflect this
growth and its modernisation must continue,
with a focus on infrastructure development,
expansion of its airline network and enhancement of safety and security.
The relationship with the
licensing authority – the Ivory Coast
government – was critical to this
survival.
3 A
irport fees (i.e., landing fees, passenger fees, etc.) are set by official decree.
4 Reviewed every 5 years and monitored/adapted on a yearly basis.
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PRIVATE SECTOR & DEVELOPMENT
CASE STUDY
CASE STUDY
CASE STUDY
A B I DJA N I NTER NATI ONAL AI R P ORT:
A V I A B L E C ONC ESSI ON DESPI T E T H E T URMOIL
constrained, particularly by very
high airport taxes. 2010 - 2011:
Post-election
crisis
2002:
Air Afrique
bankruptcy
2015:
Record
passenger
traffic
1,573
1,300
962
960
965
912
822
1,000
800
776
600
647
773
815
931
1,047
1,400
1,200
1,178
1,254
1,175
952
883
792
757
627
AÉRIA’s development remains
Dec 1999:
Coup d’Etat
1,600
780
A
CASE STUDY
Traffic at Abidjan international airport between 1991 and 2015
1996:
Start of the
concession
Traffic forecasts are in line with the airport
management’s objective of an estimated 2 million passengers a year by 2020 with an annual
growth rate of about 5.7% in 2016-2020, rising
to nearly 2.7 million by the end of the concession in 2029. Such growth will require further
investment to expand capacity. Airside, more
stands are needed to accommodate larger aircraft while landside the terminal building will
have to be expanded. AÉRIA must also tailor
its infrastructure to the requirements of the flag
carrier, Air Côte d’Ivoire. Operating as an airline hub requires adaptation both on the airside
and in the terminals. For example, facilitating
passenger transfer from one aircraft to another
requires careful flow management.
The current objectives for Abidjan International
Airport are to grow and diversify its airline
network, enhance safety and security and expand
its infrastructure. To “future-proof” its business,
AÉRIA is working with the teams at Egis to
plan for the airport’s modus operandi in 2025
when it will need to be able to handle more than
2.5 million passengers. As passenger behaviour
and expectations evolve and the world becomes
increasingly digitised, the infrastructure and
services at the airport need to evolve accordingly and AÉRIA’s role as airport operator is
to ensure that this happens.
Naturally, the Company is also investing heavily
in its personnel. Having an international group
with the stature of Egis as stakeholder gives
AÉRIA access to know-how and industry best
practices that help foster the professional expertise and people skills it needs. AÉRIA has also
been running an ambitious training programme
A MID-TERM INVESTMENT PLAN
ÉRIA has made a number
of short-term term investments to ensure continuing
infrastructure development.
The 2013 priority was to
upgrade its installations to be able to accommodate the Airbus A380. In 2015, EUR 4.5 million
were invested in upgrading and renovating the
international departure areas. Improvements
will continue in 2016 with the replacement of
the baggage conveyor and enlargement of the
car parks.
for several years to enhance its skillset and boost
recognition and motivation amongst the teams.
820
At present, while the situation is clearly improving, AÉRIA’s development remains constrained,
particularly by very high airport taxes. In the
competitive world of air transport, global airlines
compare many different airports before opening
a route, and flight taxes are a key factor in the
selection process. AÉRIA directors recently met
with the Ivory Coast Ministry of Transport in
an effort to strike a balance acceptable to all
parties. Shortly afterwards, the government
made an official announcement in the Council of
Ministers that there would be a reduction in the
various taxes equivalent to EUR 18 per ticket.
AÉRIA’s challenge is to continue to develop the
airport via tailored investment plans without
destabilising its finances. In total, AÉRIA has
earmarked nearly EUR 100 million in investment
– a significant part of which will be financed out
of its own funds. Since all of these transformations
are based on dynamic forecasts of the country’s
economic development, this investment plan
necessarily includes an element of risk.
1,083
One of the main objectives of Abidjan Airport is
to start a service to the United States and in 2015
the airport obtained security approval from the
American authorities, a vital preliminary step for
flights to or from the US. Moving forward, in
2016 airworthiness certification will be granted
by ANAC, the national authority recognised by
the International Civil Aviation Organization.
Once these approvals are in place, AÉRIA will
be operating to the same standards as Western
international airports.
1,085
CASE STUDY
Huge efforts are being deployed to grow national,
regional and international air traffic. In 2015,
the national carrier, Air Cote d’Ivoire, represented some 40% of traffic at Abidjan Airport.
It mainly handles connecting flights; Abidjan is
the hub (transfer point) providing access to and
from West and Central Africa. Air France – the
second largest carrier in volume terms – handles
16% of traffic. Air France/KLM has expanded
its Paris-Abidjan service to seven flights per
week, some of which use Airbus A380’s. In
addition Corsair has officially announced the
permanent resumption of four flights a week
from Paris beginning in June 2016.
400
200
91
19
1
1
92 993 994 995 996 997 998 999 000 00 002 003 004 005 006 007 008 009 010 01 012 013 014 015
2 2
1
1
2
1
2
1
1
1
1
2
2
2 2
2
2
2
2
2
2
2
2
19
Source: EGIS, 2016
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PRIVATE SECTOR & DEVELOPMENT
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PRIVATE SECTOR & DEVELOPMENT